Republicans in the legislature want to help school districts repair or replace dilapidated schools, but they have come up with two competing strategies for how to do it.
Senate Republicans are putting up a pay-as-you-go plan for school construction as an alternative to the $1.9 billion bond House Speaker Tim Moore has proposed.
The Senate GOP method would use a money from the State Capital Infrastructure Fund, a new pot of cash the state will start filling this year. The fund was established in the 2017 budget and will receive 4 percent of state tax revenue and other money. The legislature set up the fund to pay debts, for UNC system school and state agency buildings, and for repairs and renovations.
Senate Republicans propose increasing the contribution to the fund to 4.5 percent of tax revenue, and letting K-12 schools use some of the money for school construction. They said their plan will result in a little more than $2 billion each for K-12 schools, UNC and state community colleges, and state agencies over nine years, without the state having to take on debt.
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School construction is a priority, said Sen. Harry Brown, a Jacksonville Republican and one of the bill sponsors.
“We just think that our plan is the right way to go because it dedicates more capital at less cost,” Brown said at a news conference Wednesday.
Brown, a Senate budget committee chairman, said the legislature’s fiscal research staff reported the bonds would cost the state $1.2 billion in interest over 30 years.
Senate Bill 5 would deliver more money than bonds would, and start two years sooner, Brown said.
Moore, a Republican, announced plans in December for a $1.9 billion school bond, with most of the money going toward K-12 construction and about $600 million to the state’s universities and community colleges.
His plan was to put the question on the 2020 ballot. Under the Senate plan, voters would not have a say.
Moore led a forum on the statewide bond proposal in Harnett County this month, in which state Schools Superintendent Mark Johnson participated, the Carolina Journal reported.
Johnson said in a statement Wednesday that he was pleased to see agreement in the legislature on the need for school construction money.
“I know the urgency and need for this state funding for school construction, especially for rural North Carolina, from my firsthand experience visiting our schools across the state,” Johnson said in the statement. “I am pleased to see agreement in the legislature on this point, and I look forward to working with our partners in the General Assembly as we continue to discuss the details of that funding.”
What about lottery money?
The state has other school construction funds, including the Public School Building Capital Fund and the Needs-Based Public School Building Capital Fund. The legislature has put $100 million in lottery revenue into the Public School Building Capital Fund each year since 2012, according to the Public School Forum of North Carolina.
The Senate bill would write that $100 million-per-year contribution into law.
State law requires public schools to meet requirements for smaller classes in kindergarten through third grade. The legislature extended deadlines for meeting the requirements because many districts said they did not have enough space for more classrooms or enough money to hire the teachers required without cutting arts and physical education, The N&O has reported.
The Senate’s construction bill would require districts that don’t have enough space to meet class-size requirements to use any money they’d get from the infrastructure fund to comply.
The scope of the project and the idea of doing it without paying interest sounds great, said Charlotte-Mecklenburg Schools governmental liaison Charles Jeter. But “like with most things, the devil gets in the details.”
Jeter, a former Republican state representative, said he wants to know more about how the money would be allocated to school districts.
Jeter said the other concern with putting the money into budgets, as opposed to issuing bonds, is that it could dry up if the economy flags. “It’s kind of based on the premise that the economy keeps rolling like it is.”
Brown said at the news conference that the state has built up enough money in its rainy-day fund to support the Senate school construction plan in an economic downturn.
Moore predicted the House would “probably pass our bond pretty soon” but would also consider the alternate plan if it passes the Senate.
“So, frankly, there may be a way to integrate both proposals. To have bond for some, pay as you go on some,” he told reporters Wednesday. “What it shows, though, is because we’ve made the tax changes we have, and we’ve seen the economic growth that the state’s had, that we have a number of options to really bring significant school construction to this state.”